Note 4 - Fair Value Measurements

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Text Block]

(

)

Fair Value Measurements

ASC

820,

Fair Value Measurements,

establishes a framework for measuring the fair value of assets and liabilities using a hierarchy system consisting of

three

levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:

Level

- Valuation is based upon quoted prices for identical instruments traded in active markets that the Company has the ability to access.

Level

- Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are

not

active, and model-based valuation techniques for which significant assumptions are observable in the market.

Level

– Valuation is generated from model-based techniques that use significant assumptions

not

observable in the market and are used only to the extent that observable inputs are

not

available. These unobservable assumptions reflect the Company's own estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

The following table summarizes the assets and liabilities of the Company for which fair values are determined on a recurring basis as of

September 30, 2020

and

December 31, 2019.

	Carrying value at September 30, 2020
(Dollars in thousands)	Total		Level 1		Level 2		Level 3
Securities available for sale	$	118,564		0		118,564		0
Equity securities		127		0		127		0
Mortgage loan commitments		266		0		266		0
Total	$	118,957		0		118,957		0

	Carrying value at December 31, 2019
(Dollars in thousands)	Total		Level 1		Level 2		Level 3
Securities available for sale	$	107,592		0		107,592		0
Equity securities		167		0		167		0
Mortgage loan commitments		14		0		14		0
Total	$	107,773		0		107,773		0

There were

transfers between Levels

during the

three

nine

month periods ended

September 30, 2020.

The Company

may

also be required, from time to time, to measure certain other financial assets at fair value on a nonrecurring basis in accordance with GAAP. The following table provides the level of valuation assumptions used to determine each adjustment and the carrying value of the related individual assets or portfolios at

September 30, 2020

and

December 31, 2019.

	Carrying value at September 30, 2020
(Dollars in thousands)	Total		Level 1		Level 2		Level 3		Three months ended September 30, 2020 total gains		Nine months ended September 30, 2020 total gains
Loans held for sale	$	7,225		0		7,225		0		24		86
Mortgage servicing rights		2,880		0		2,880		0		0		0
Loans (1)		2,881		0		2,881		0		12		50
Real estate, net (2)		414		0		414		0		0		0
Total	$	13,400		0		13,400		0		36		136

	Carrying value at December 31, 2019
(Dollars in thousands)	Total		Level 1		Level 2		Level 3		Year ended December 31, 2019 total losses
Loans held for sale	$	3,606		0		3,606		0		(40	)
Mortgage servicing rights		2,172		0		2,172		0		0
Loans (1)		3,126		0		3,126		0		(28	)
Real estate, net (2)		580		0		580		0		0
Total	$	9,484		0		9,484		0		(68	)

(

)

Represents the carrying value of loans for which adjustments are based on the appraised value of the collateral. The carrying value of loans fully charged-off is zero.

(

)

Represents the fair value of foreclosed real estate and other collateral owned that were measured at fair value subsequent to their initial classification as foreclosed assets.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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